Port of Hueneme and city are at odds over Measure M

Measure M, the ballot measure that could raise taxes on contractors and other businesses in the Port of Hueneme and Naval Base Ventura County, is at the center of a political battle that pits community groups and businesses against city officials.

Businesses and community groups say that if it passes, the ballot measure would create an unfair and confusing tax hike. City officials say the proposal is intended to level the playing field and collect fees from major companies that thus far haven’t paid certain business taxes.

Measure M would update the city of Port Hueneme’s municipal code, eliminating a business-license fee that amounts to roughly $100 for small, home-based businesses while imposing business license taxes — as well as setting new rates that account for inflation — on larger businesses in the port and naval base.

City leaders including Mayor Jonathan Sharkey have come out in support of the measure, which they say seeks to update an “archaic” system that dates to 1978.
Measure M could cost port customers millions of dollars in new taxes, according to the Oxnard Harbor District, which has gathered former naval commanders, the Pacific Merchant Shipping Association, port businesses and even teachers and union members to join it in opposing the proposal.

“By way of example, one customer [who] currently pays $8,100 would have a potential tax of $1.4 million under Measure M for a 17,447 percent increase,” a resolution from the Harbor District said.
That example refers to Global Auto Processing. “[Measure M] would put us out of business,” CEO Don Asdell told the Business Times.

The measure, which requires a simple majority vote to pass, puts more than 3,000 jobs and $185 million in direct business revenue in jeopardy, according to a Martin Associates study commissioned by the Oxnard Harbor District. Measure M would impose exorbitant, unsustainable taxes that would drive businesses out of the area, according to the study.

Businesses in the port already face possessory interest taxes and revenue-sharing agreement fees that are partially paid into the city of Port Hueneme for public services such as school district funding, said Mary Anne Rooney, president of the Oxnard Harbor District. “It could mean that no other customer is going to come and work here in that type of environment,” Rooney said. Global Auto Processing currently pays hundreds of thousands of dollars in taxes, including a business license tax.

The port itself paid the city of Port Hueneme $1.2 million through a revenue-sharing agreements in its 2014 fiscal year. By overtaxing and potentially pushing out port businesses, the measure could jeopardize a huge flow of city funding, said Wesley Davis, an area schoolteacher and president of the Oxnard Federation of Teachers.

“Budgets are so tight in school districts right now, so every penny counts,” he said. A “net decrease in tax revenue” could result from the measure, he said. “It’s the kind of tax that will run businesses out of the area.”

Sharkey, Port Hueneme’s mayor, said that the harbor district’s estimates of the financial impact are exaggerated. “They put out a lot of phony information and got a lot of people scared,” he said.
Rates would still be subject to public opinion and an appeal process, he said. “If we set an insane rate, it would take the judge about five minutes to throw it out.”

The measure would bring in about $500,000 to $1 million in new revenue for city coffers, according to Port Hueneme estimates.

City Councilman Ellis Green, citing Prop 218, said the measure must be passed before there’s a public hearing that decides on final rates. “First we have to get the people’s OK,” he said. “That’s the first process. Then we can hold a hearing and determine the rates. It’s not that we’re stupid or lazy. We’re just following the law.”

The ballot language only includes ceilings, according to Sharkey, which he said makes the harbor district’s estimates basically invalid.

Rooney said the uncertainty around Measure M is confusing to businesses. “Yes, they do have an ability to set the rates lower, but that’s an ability — not an obligation,” she said.

Exxon, Del Monte and BMW

The port currently collects about $42,000 a year in business-license taxes — which are the only taxes Measure M is dealing with — according to Rooney.
Sharkey said some businesses are not paying basic business-license taxes. He named food distribution firm Del Monte Foods, German automaker BMW and oil giant Exxon as examples of big-name companies that fail to pay this tax. Rooney, the harbor district president, said Del Monte is the only one of those three with facilities actually located in the port. Exxon and BMW both operate in the port but their facilities are based in Oxnard, she said.

“In the past, they didn’t have a category for Del Monte,” she said. “They’re the only ones that don’t have a business-license tax, however they do pay a possessory interest tax of over $100,000. It’s not like they’re sitting there, not paying anything.”

Del Monte is exempt from paying a business-license tax that applies to other businesses in the city of Port Hueneme — both those located inside and outside the port — since no business category in the 1978 municipal code applies to it. Rooney said the company currently pays $102,000 for a possessory tax and $180,000 through a revenue-sharing agreement between the port and the city. Del Monte declined to comment.

Other port businesses, such as Global Auto Processing and Yara North America, a fertilizer company that has also raised concerns about the measure, do pay a business-license tax.

Don Smith, director of facilities operations for Yara North America, said Measure M would make the firm less competitive. “Our competitors who operate in other ports that do not levy similar proposed taxes will enjoy a significant advantage over us,” he wrote in an email to the Business Times. “We believe that Measure M will likely render handling our products through Port Hueneme and the city of Port Hueneme less attractive than using alternative ports that we currently operate in on the West Coast. As a result, this would necessitate reassessing the viability of Yara’s presence in the region.”

Port Hueneme Mayor Sharkey said the city expects to remain competitive with other municipalities. “Our revenue stream agreement with the Oxnard Harbor District is the single largest source of revenue for the city of Port Hueneme,” he said. “We want more business from them. Why would we be trying to drive out business? That doesn’t pass the common-sense test.”